Poultry feed prices jump twice in a month as raw material costs rise 27%

Highlights:

• Animal feed prices have risen nearly 7% since early August
• Corn, DORB and soybean meal prices surged sharply
• Feed manufacturers still lose over Tk3 per kilogram
• Rising costs are forcing small farmers to cut production
• Farmers are demanding lower taxes and cheaper feed inputs
• Higher costs and reduced supply are pushing up egg prices

A kilogram of animal feed that sold for around Tk68 in early August now costs up to Tk72.50, an increase of nearly 7%.

Feed manufacturers, however, say they are still incurring losses of more than Tk3 per kg as finished-feed prices have not fully reflected rising raw-material costs.

Industry insiders said feed prices had increased twice in a month as major raw materials became more expensive, forcing feed mills to absorb losses, farmers to cut production and consumers to pay more for eggs and chicken.

Over the past month, corn prices have increased by about 24%, de-oiled rice bran (DORB) by 27% and soybean meal by 20%, according to industry stakeholders.

Prices of other protein sources have also risen, while exchange-rate fluctuations have added pressure on imported ingredients.

Infograph: TBS

Mosharraf Hossain Chowdhury, president of the Bangladesh Poultry Industries Association (BPIA) and managing director of Astha Feed Mill, said soybean prices had risen from around $430 per tonne in August to $530, an increase of more than 20%.

He said feed prices were increased by Tk2 per kg in late August following requests from small feed millers, while a further Tk2.50 increase was made in mid-September to reduce losses faced by small and medium-sized feed mills.

"There is no alternative to increasing feed prices when the price of soybean rises so sharply. Even after increasing prices twice, we are still losing more than Tk3 per kg," he said.

The price of corn with 13% moisture has risen to Tk38.80 per kg from Tk31.30 a month ago. DORB has increased from Tk26 to Tk33 per kg, while rice bran containing 16% oil has risen from Tk33 to Tk39. Mustard oilcake has increased from Tk36.50 to Tk39.70.

ATM Habibur Rahman, chief business officer of Akij Feed Mills, said corn prices had risen particularly sharply.

"During March-April-May, corn was available at Tk28-29 per kg. But in June, July and August, the price increased to Tk38-40," he said.

International corn prices have also risen from around $235-240 per tonne to nearly $290, he added.

According to Habibur, raw materials account for around 80-85% of the total cost of producing quality feed.

"When the prices of corn, soybean meal, rice bran and DORB rise in the local or international market, it becomes difficult for feed mills to sell feed at the previous price," he said.

He said a Tk4.50 increase in the price of feed per kg should raise the price of chicken by no more than Tk6 per kg.

However, supply-chain disruptions are a major reason behind the volatility in the market.

He also cited gas and electricity shortages as additional cost pressures, saying disruptions were raising production costs and reducing demand.

Habibur further said feed prices have a relatively limited impact on the prices of chicken and eggs. 

Small farms cut production

Rising feed costs are forcing farmers to reduce production, with feed accounting for a major share of poultry farming expenses.

Amir Hossain, a broiler farmer in Kutbari village of Mawna, Gazipur, used to buy around 30 sacks of feed a month. He has reduced this to 28 sacks and cut the number of chickens on his farm.

"Prices of different types of animal feed have increased by Tk2-3 per kg over the past week. The price of a 50kg sack of feed has increased by as much as Tk150," he said.

A 50kg sack of rice bran has risen by Tk500 to Tk1,800, while corn has increased from Tk25 to Tk37 per kg. A 50kg sack of poultry feed now costs as much as Tk3,675.

"When feed prices rise, our costs increase, but we do not get a corresponding increase in chicken prices. So we have to reduce feeding. We have also reduced the purchase of chicks because we fear the birds will gain less weight," Amir said.

The rising costs have also triggered protests by farmers in Rajshahi, Gazipur, Pabna, Kishoreganj, Cumilla, Narsingdi, Dhaka, Kushtia and Mymensingh since early June.

Farmers have demanded lower feed prices, reduced taxes and duties on imported raw materials, and fair prices for eggs and chickens.

Pabna farmer Jibon Islam said feed accounts for around 80% of production costs for some farmers.

"It is becoming increasingly difficult for farmers to survive by purchasing feed at higher prices. Load-shedding has also caused deaths of chicks, increasing our losses," he said.

Russell Pradhan, general secretary of the Bangladesh Marginal Poultry Farmers Council, said supplies of locally produced DORB and rice bran should first be secured for domestic demand.

"If necessary, VAT, taxes and duties on imported raw materials should be reduced. Market monitoring should also be strengthened to prevent artificial shortages," he said.

State Minister for Fisheries and Livestock Sultan Salahuddin Tuku said the government was working to reduce the cost of feed and other production inputs.

"Reducing production costs is essential if we want to ensure safe and affordable poultry products for people," he said.

Pressure reaches consumers

The rise in feed prices is also pushing up consumer prices as higher production costs and lower farm output put pressure on egg and chicken supplies.

In Dhaka markets on Saturday, farm eggs were selling at around Tk150 per dozen and broiler chicken at Tk190-200 per kg.

Before August, broiler chicken sold for Tk170-180 per kg and farm eggs for Tk130-140 per dozen. Prices rose at the beginning of August and have not returned to those levels.

Mohammad Liton of Ma Rokea Boiler House at Karwan Bazar said floods, excessive rainfall and heat had caused deaths of laying hens and broilers at many farms over the past five or six months.

"Many farmers did not restart production. Recent load-shedding has also reduced poultry farming. These factors have contributed to higher egg and chicken prices," he said.